Fraud probe launched on Iraq deals

A team of specially trained investigators will hunker down in an Army office north of Detroit on Monday to begin poring over hundreds of Iraq war contracts in search for rigged awards.

This team of 10 auditors, criminal investigators and acquisition experts are starting with a sampling of the roughly 6,000 contracts worth $2.8 billion issued by an Army office in Kuwait that service officials have identified as a hub of corruption.

The office, located at Camp Arifjan, buys gear and supplies to support U.S. troops as they move in and out of Iraq. The pace of that operation has exploded since the beginning of the Iraq war in March 2003.

Based on what the team finds, the probe may expand and the number of Army military and civilian employees accused of accepting bribes and kickbacks could grow, U.S. officials told The Associated Press. Nearly two dozen have been charged so far.

Signs of trouble include contracts continually awarded to vendors without the usual competition and awards that were competed but went to the bidder with the highest price rather than the lowest. A mismatch between the original product to be purchased and what was actually delivered is another red flag.

“Is there anything in there that might indicate to us that there might be some potential fraudulent activity?” Jeffrey Parsons, director of contracting at Army Materiel Command, said in an AP interview. “If there are patterns that we start to identify, then we’re going to do further review.”

Contracts with significant problems will be forwarded to the Army Audit Agency and the Army Criminal Investigation Command. If there’s credible evidence of wrongdoing, the FBI and prosecutors from the U.S. Justice Department are called in.

In Warren, Mich., home to a large Army acquisition center, the contracting review team will examine 314 of the Kuwait contracts, each worth more than $25,000 and issued between 2003 and 2006.

In Kuwait, a separate team of 10 at Camp Arifjan is already going through 339 contracts of lesser value and awarded during the same time period, according to Army Materiel Command at Fort Belvoir, Va.

Both reviews are to be finished before the end of the year.

A probe of 2007 contracts out of Kuwait has been completed; investigators found numerous problems with the office, including inadequate staffing and oversight, high staff turnover, and poor record-keeping.

In the midst of those shortcomings came billions of dollars in war funding, creating an environment ripe for misconduct and malfeasance.

The teams in Michigan and Kuwait will go through paper records and also use data-mining tools to electronically search data stored on computers.

“Do we have contractors with different names but the same address?” Parsons said. “That would cause some suspicion.”

Tips from individuals familiar with the contracts are another tool for finding flawed awards, he said.

The contract review process isn’t foolproof, however.

If a contracting officer and a vendor are determined to break the rules for personal gain, it can be difficult to pinpoint corruption, according to Parsons, who also is serving as senior adviser to a contracting task force recently established by Army Secretary Pete Geren.

“You can have a contract file that is pristine — all the documentation is there,” Parsons said. “Just going through the contract files doesn’t necessarily give you 100 percent assurance that something else might not have been going on.”

The efforts in Michigan and at Camp Arifjan are parts of a broader inquiry being conducted by the task force, which was formed by Geren following a spike in the number of criminal cases related to the acquisition of gear and supplies for U.S. troops.

Many of the cases stemmed from fraudulent or mismanaged contracts issued by the Kuwait office, prompting Geren to call for a detailed probe of the work done there.

The Army Criminal Investigation Command has 83 ongoing criminal investigations related to contract fraud in Iraq, Kuwait and Afghanistan, according to spokesman Chris Grey.

Grey said 23 individuals have been charged with contract fraud and more than $15 million in bribes has changed hands.

One of the largest cases involves Army Maj. John Cockerham, who is accused of bribery, conspiracy, money laundering and obstruction. Prosecutors allege Cockerham, along with his wife and sister, took at least $9.6 million in bribes in 2004 and 2005 while Cockerham was a contract officer stationed in Kuwait

From the 6,000 Kuwait contracts flowed 18,000 transactions – numerous orders could be placed on a single contract – for items such as bottled water, laundry services, barracks, food, transportation, and warehouse services.

In 2005, Lt. Gens. Steven Whitcomb and John Vines, then both top Army commanders in Iraq, became so concerned over allegations of corrupt contracting that the Criminal Investigation Command established field offices in Iraq and Kuwait.

Deceiving the checks and balances in the federal procurement system takes careful planning, Frank Anderson, president of the Defense Acquisition University at Fort Belvoir, said in a separate interview.

“You had some smart bad apples,” said Anderson, who leads the organization that trains the military’s acquisition officials. “It had to be someone who understood the business well enough to figure out how to get around the system.”

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